Chinese manufacturers beat US counterparts

While low labour costs may have fuelled China’s production growth, that country’s vigilant pursuit of Western manufacturing standards and capabilities may eventually secure it industrial preeminence.

A new study that compares leading Chinese manufacturing facilities with US plants finds that while low labour costs may have fuelled China’s production growth, that country’s vigilant pursuit of Western manufacturing standards and capabilities may eventually secure it industrial preeminence.

The study – The China Vision: Opportunities and Challenges for US Manufacturers – indicates the quality-driven Chinese manufacturers already top their US counterparts in several world-class operating practices.

The new Grant Thornton LLP analysis, based on research conducted by the Manufacturing Performance Institute (MPI) and IndustryWeek magazine, assessed 406 Chinese facilities with ISO 9001 certification and 681 US manufacturers.

Among other findings, the survey reveals that the best of China’s facilities spent a median of 20% of their sales on capital equipment compared to just 3% at US plants. This also held true for spending on information technology (IT), with China plants spending a median 5% of sales on IT versus a median 1.4% at US plants.

53% of the China plants train more than 20 hours per employee per year, compared with 35% of US plants. More than one-in-four Chinese facilities trains more than 40 hours versus just 11% of US plants.

65% of Chinese plants reported their primary improvement methodology to be Total Quality Management, compared to 14% of US plants.

An 73% of China plants ranked “high quality” as their top go-to-market strategy versus 70% for US facilities.

Second to quality, US plants said service and support was their next priority (53%), while China plants said innovation (54%) was.

And for the category of wages, China’s leading manufacturers offer wages dramatically lower than those offered by US plants — $121 per month, excluding overtime, compared to $2,160 per month in the US.

But is sending a product design overseas for manufacture really the only cost-effective solution, or would US companies benefit from taking the time to redesign products and keep manufacturing in the US?

A new article from Boothroyd Dewhurst examines some of the hidden costs of outsourcing that US manufacturers may not be taking into account.

The company claims that product redesign could be a cost-effective alternative to outsourcing, and offers two case studies that quantify costs associated with manufacturing and assembling products in China.